Lessons from the Mathadi Model

**Aparna Bhatnagar

Introduction

The Maharashtra Mathadi, Hamal, and Other Manual Workers (Regulation of Employment and Welfare) Act, 1969, represents a landmark legislative intervention designed to secure the employment and welfare of unorganized manual labourers in post-Independence India. The Act provides formal recognition and social security to vulnerable workers engaged in precarious and exploitative working conditions. Notably, the Act was recognized by the International Labour Organization (ILO) as a unique initiative for providing social security to unprotected workers. Domestically, the report of the second National Commission on Labour hailed it as a model framework for addressing structural vulnerabilities in the informal sector, inspiring subsequent efforts such as the Delhi Mathadi, Palledars, and Other Unprotected Manual Workers’ Bill, 2019, although the latter remains unenacted. 

In July 2023, the Maharashtra government proposed amendments to dilute the provisions of the Act by excluding certain industries—such as iron and steel, salt pans, and fishing—and redefining the scope of “unprotected worker” to exclude those employed in manufacturing areas, shop floors, family-run enterprises, or in processes involving mechanical or automated operations. This triggered widespread dissent among the Mathadi community, leading to its eventual withdrawal. Responding to these concerns, the Maharashtra government reassured workers that the Act’s provisions would remain intact and emphasized the importance of citizen engagement to address potential loopholes in its implementation. Against this backdrop, this article delves into the labour movements of the 1950s that laid the foundation for the Act, analyses its key provisions, and critically evaluates the efficacy and sustainability of the ‘Mathadi model’ in addressing the persistent vulnerabilities of the unorganized sector.

Key Provisions and Impact of the Act

The Maharashtra Mathadi, Hamal, and Other Manual Workers (Regulation of Employment and Welfare) Act, 1969 was enacted to regulate the employment conditions and ensure the welfare of head-load and manual workers engaged in physically demanding and precarious forms of labour. A defining feature of the Act is the establishment of tripartite Mathadi Boards at the district level, comprising representatives of workers, employers, and the government. These Boards serve as exclusive intermediaries, overseeing the registration of both workers and employers, determining wage rates, collecting levies from employers, and ensuring the timely and transparent disbursement of wages to workers. Beyond wage regulation, the Boards are also tasked with administering key social security benefits, including medical care, compensation for workplace injuries, pensions, and educational support for workers’ families.

As noted in a 2020 report, a particularly innovative provision of the Act is the concept of “disappointment money”, which requires employers to compensate registered workers even when no work is available. This mechanism functions as a de facto unemployment allowance, offering a critical measure of income security to workers in a sector historically characterized by high levels of insecurity and vulnerability. The Act also promotes decentralised governance by granting autonomy to district-level Mathadi Boards, while maintaining a balanced tripartite representation that ensures the interests of all stakeholders—workers, employers, and the state—are appropriately considered. This structure helps foster a collaborative regulatory environment rather than a purely top-down administrative model.

Another important aspect of the Act is its self-sustaining financial model. The Mathadi Boards are primarily funded through employer contributions, minimizing reliance on government finances and ensuring fiscal sustainability. By formalizing hiring processes, wage payments, and compliance with labour laws, the Act helps reduce exploitation, enhances transparency, and brings a large segment of informal labour into the ambit of regulated employment. Moreover, the Boards assume certain statutory responsibilities on behalf of employers, such as ensuring compliance with labour laws related to wages, compensation, and maternity benefits, thereby simplifying the regulatory burden on businesses.

In terms of impact, the Mathadi Act has significantly improved wages, employment stability, and access to social security for Mathadi workers, transforming what was once a highly vulnerable and informal workforce into a more protected and organized labour group. By integrating trade unions into the governance process, the Act leverages their collective strength to effectively enforce worker rights. This tripartite, participatory governance model has not only enhanced labour standards within Maharashtra but has also served as a reference point for regulating other segments of informal labour across India.

Debate on diluting provisions  

In July 2023, the Maharashtra government introduced a Bill in the Legislative Assembly to amend the Maharashtra Mathadi, Hamal and Other Manual Workers (Regulation of Employment and Welfare) Act, 1969 and the Maharashtra Private Security Guards (Regulation of Employment and Welfare) Act, 1981. Both Acts had played a crucial role in regulating the employment conditions and welfare of manual workers and private security guards. However, the proposed amendments triggered considerable debate, as they sought to dilute several protections originally guaranteed under these laws.

One of the key amendments involved removing certain markets from the coverage of the Mathadi Act, effectively excluding workers in industries such as iron and steel, salt pans, khokha making, and fishing from its ambit. This directly impacted workers engaged in loading, unloading, and other manual work in these sectors. Additionally, the Bill narrowed the definition of ‘unprotected worker’, excluding workers in manufacturing processes, shop floors, family-run businesses, and workplaces that relied on automated or mechanical processes. By limiting the definition, the Bill reduced the number of workers eligible for protection under the Act.

The Bill also proposed to dissolve the Advisory Committees, which had previously ensured worker representation in decision-making processes, and replaced them with Authorities composed entirely of state government officials. This significantly weakened worker participation in governance. Furthermore, the state government was granted expanded powers, including the authority to define unprotected workers and determine what constituted manual work. The Bill also allowed the government to cancel worker registrations and removed the finality of decisions made by the Mathadi Board, permitting these decisions to be challenged in court.

These amendments collectively shifted power away from workers and towards the state, while simultaneously restricting the Act’s coverage and protections. Labour unions and civil society groups strongly opposed the Bill, arguing that it undermined the core purpose of the Mathadi Act, which had been enacted to ensure social security and decent working conditions for vulnerable manual labourers. The proposed changes were widely seen as a regressive step that eroded the hard-won rights of Mathadi workers in Maharashtra.

Challenges and Limitations

The Mathadi enquiry report highlights growing challenges faced by the Mathadi Boards due to the changing nature of work and declining tripartism. The “No work, No pay” model is under strain as automation, relocation of markets, and direct-to-consumer models reduce earning opportunities for workers. While the Boards provide benefits like provident fund contributions, gratuity, and work-injury compensation, they lack adequate old-age pensions and comprehensive insurance, forcing many workers to continue strenuous labour into old age or rely on group solidarity for financial support. Additionally, the responsibility for the levy that funds these benefits remains unclear, with costs potentially borne by employers, workers, and consumers. The original tripartite structure of the Boards—meant to balance power between workers, employers, and the state—has eroded, with increasing government control leading to mistrust among workers and unions. The Boards now function largely as administrative offices, often unaccountable to the stakeholders they were meant to serve. Stronger union representation has historically improved worker protections, but the sidelining of workers and employers in decision-making has weakened the system.  

The Boards also face several challenges regarding the registration and enforcement of workers and employers. Despite the existence of the Mathadi Boards, many unregistered workers continue to work in the areas covered by these Boards, often as subcontracted or “invisible” workers. The Mathadi Boards are hampered by staffing shortages, with regions such as Pune having only one inspector for thousands of registered workers, which exacerbates the issue of unregistered workers. This lack of adequate staff and enforcement mechanisms has led to a steady decline in the number of registered workers and employers. The inefficiencies of the Mathadi Boards are compounded by resistance to the expansion of Tollis, the groups through which work is distributed. Under the current system, two-thirds of the members must approve the induction of new workers, which creates barriers for new entrants. Existing members often prefer to retain the work for themselves, thus limiting opportunities for newcomers. In recent years, there have been newspaper reports of instances of bullying and extortion of companies and employers by those who claim to be Mathadi workers. These individuals often obstruct work until their demands for bribes are met, and in some cases, employers and warehouse officials collude in overbilling or falsely billing for non-existent workers.  These issues hinder the Boards’ ability to ensure fair and regulated labour conditions for workers, leading to an ongoing struggle to effectively manage the system.

To address these challenges, it is recommended that genuine tripartism be revived by ensuring equal representation of workers and employers in the decision-making processes of the Mathadi Boards. It is also suggested that the financial responsibility for welfare schemes be clearly apportioned among employers, workers, and the state, ensuring transparent and balanced contributions from all stakeholders. To enhance social security, it is recommended that coverage be expanded to include old-age pensions and comprehensive insurance, thereby providing workers with greater economic security. Additionally, enforcement capacity should be strengthened by increasing the number of labour inspectors, simplifying the registration process, and curbing subcontracting practices that exclude workers from formal protections. It is further advised that the Tolli system be reformed to promote greater transparency and merit-based inclusion of new workers. Finally, effective grievance redressal mechanisms should be established to prevent extortion and corruption, while simultaneously safeguarding the legitimate rights of workers.

Conclusion 

As the nature of work evolves and informality persists at high levels globally, there is a growing need to rethink how labour is regulated and how social and labour protections for casual and informal workers are financed. Two primary approaches have emerged in the context of India’s informal labour market. The first advocates for tax-based basic social protection measures that should be universally accessible to all residents, given the substantial contribution of the informal economy to the GDP and the fundamental right to social protection. The second approach emphasizes that users of informal labour should bear the responsibility of financing social protection for these workers. These approaches are complementary, as tax-based measures can ensure basic universal coverage, while contributory social insurance tied to income or wages can provide higher levels of protection, particularly for income replacement. 

India’s sectoral welfare boards provide important institutional examples of how social protection can be extended to informal workers despite fragmented and complex employment relationships. These boards vary significantly in their financing models. The Mathadi Boards, which regulate head-load workers, adopt a wage-based levy system. Employers are legally mandated to pay a statutory levy directly proportional to the wages of Mathadi workers, ensuring a clear link between wages, contributions, and entitlements. This direct contribution mechanism enhances financial transparency, stabilizes workers’ incomes over their life course, and ensures the boards’ financial independence and long-term sustainability. 

By contrast, the Maharashtra Building and Other Construction Workers Welfare Board is funded through a cess collected from construction companies, set at 1% of the total construction cost (excluding land). Workers contribute only nominally, through a small registration fee and an annual subscription of INR 1 each. However, this cess is not directly linked to individual workers’ wages, which reduces transparency and weakens the connection between contributions and benefits. In the case of the Maharashtra Domestic Workers Welfare Board, financing comes entirely from government grants, with no employer contribution requirement. This heavy reliance on state funding has resulted in serious implementation gaps, with many welfare schemes remaining underfunded and unimplemented. 

Among these models, the Mathadi Boards stand out for their effective financing mechanism. The wage-based levy ensures fairness, as employers bear the primary responsibility for funding workers’ benefits. It also provides financial autonomy and sustainability for the boards, while maintaining transparency and enabling income stabilization for workers. In conclusion, the Mathadi model offer critical lessons for extending social protection to informal workers worldwide. It provides a compelling pathway for achieving universal and sustainable social protection in contexts characterized by high levels of informality.

**Aparna Bhatnagar was an intern with Vidhi Maharashtra. 

**Disclaimer: The views expressed in this blog do not necessarily align with the views of the Vidhi Centre for Legal Policy.